If politics is the problem, how can external actors be part of the solution? New World Bank paper

August 2, 2016

The new paper comes from Shanta Devarajan, the Bank’s Chief Economist for the Middle East and North Africa Region, (recently drafted in to help get the WDR to the finishing line) and Stuti Khemani, Senior Economist at its Development Research Group.

The World Bank seems currently to be awash with fascinating reflections and rethinking on politics and power. This one’s big message is perfectly captured in the title and abstract (my comments in italics):

‘Despite a large body of research and evidence on the policies and institutions needed to generate growth and reduce poverty, many governments fail to adopt these policies or establish the institutions. Research advances since the 1990s have explained this syndrome, which this paper generically calls “government failure,” in terms of the incentives facing politicians, and the underlying political institutions that lead to those incentives.

[starts off by acknowledging that it’s all about the politics, and requires a shift away from the purely technocratic ‘first best’ thinking the Bank has often shown in the past]

Meanwhile, development assistance, which is intended to generate growth and reduce poverty, has hardly changed since the 1950s, when it was thought that the problem was one of market failure. Most assistance is still delivered to governments, in the form of finance and knowledge that are bundled together as a “project.”

[this is pretty powerful stuff. For decades aid has been targeting the wrong thing, and is trapped in the straitjacket of ‘the project’. That combination has actually made matters worse in some cases, by shovelling money and kudos to failed institutions]

This paper proposes a new model of development assistance that can help societies transition to better institutions. Specifically, the paper suggests that knowledge be provided to citizens to build their capacity to select and sanction leaders who have the political will and legitimacy to deliver the public goods needed for development.

[the authors think donors should opt for a much more modest and general ‘enabling environment’ approach, getting information to citizens but acknowledging that what happens next is down to domestic politics, and largely out of their hands]

As for the financial transfer, which for various reasons has to be delivered to governments, the paper proposes that this be provided in a lump sum manner (that is, not linked to individual projects), conditional on the government following broadly favorable policies and making information available to citizens.

[Donors need to go back to general budget support to governments, with political conditionalities linked to the enabling environment point]

So much for the abstract. A few thoughts on the rest of the paper (only 22 pages, so even I’ve read it).

There is a clarion call for humility from donors faced with the reality of complex political and social systems:

‘There is an inherent hubris in assuming that external actors will have the capacity to identify the appropriate entry points and engineer reforms in the right direction, simultaneously solving both the technical policy problem and that of adapting it to political constraints. Ex ante, there is little reason to believe that the selected entry points are the right ones; they may make the situation worse. The incentives of donor organizations to show results and count reforms as success are further reasons to search for other approaches that do not depend entirely upon external agencies’ getting both the economics and the politics right.’

At a time when many researchers lament the deterioration in the quality of democracy and accountability in many countries, and considering Shanta works on the Middle East, the authors are strikingly upbeat.

‘During the past three and a half decades, the distribution of political institutions across countries has steadily shifted towards greater political engagement. (see graph) Political engagement within countries is also growing through elections at the local level.’

best lens for understanding government failure is not democracy v authoritarianism, but ‘political engagement’, defined as ‘the participation of citizens in selecting and sanctioning the leaders who wield power in government, including by entering themselves as contenders for leadership.’ That engagement happens under both democratic and non-democratic governments, albeit in different ways.

That’s all pretty high-level stuff – what are the implications for work on the ground?

‘For development assistance to be effective, the tradition of “bundling” knowledge and financial assistance—in a project, for instance—has to be abandoned. Knowledge assistance should be provided to citizens to help them in holding the government accountable. External actors should target transparency to nourish the growing forces of political engagement. External agents have technical capacity for generating new data and credible information through politically independent expert analysis. This technical advantage stands in sharp contrast to their lack of such advantage when it comes to building capacity and organizations for collective action from the outside.

What is different about the recommendation here is the importance of communicating to citizens, in ways that effectively shift citizens’ political beliefs and behavior on the basis of technical evidence. The traditional policy approach has treated leaders as the sole audience of expert analysis, and has treated communication to citizens as a matter not requiring scientific investigation. Communicating information to influence beliefs and political behavioral norms requires an understanding of the institutions within which and through which citizens form these beliefs.’

I found this all very thought-provoking in at least two big areas. First, should donors be doing more politics or less? The authors argue that outsiders are simply unable to get involved in the detail of domestic politics for reasons both of knowledge and politics (interference). They should therefore concentrate on creating an enabling environment through knowledge and its dissemination.

Second, if you are sceptical about the Bank, this looks suspiciously like an abdication of responsibility. There’s (another) big row going on in Washington at the moment, with NGOs claiming that the Bank is watering down the social and environmental safeguards on its lending (Oxfam agrees). This paper could easily provide the intellectual justification for this – ‘hey we can’t do politics so let’s replace all those safeguards with some vague (and easily fakeable) conditions on transparency and information, then bung grants to governments, no questions asked.’

As usual, I’ve got feet planted firmly on both sides of the fence on both of these dilemmas. Painful, but I’m getting used to it.

This is a conversational blog written and maintained by Duncan Green, strategic adviser for Oxfam GB and author of ‘From Poverty to Power’. This personal reflection is not intended as a comprehensive statement of Oxfam's agreed policies.

9 comments

>>>that knowledge be provided to citizens to build their capacity to select and sanction leaders who have the political will and legitimacy to deliver the public goods needed for development.>>>>

When I read statements like ^^, I get a touch worried. This sounds dangerously close to ‘interfering in the political matters of sovereign countries’. While I do not wish to ignore the intentions behind having leaders who care about delivering public goods, I am worried that the paper is, in a convoluted way, looking at tying aid to governance. They are not calling it ‘project’ but ‘good governance’. I think it is not the business of the bank to do this. Educating citizens is the function of government and / or civil society. Anything else will be seen as, and often is, interference and attempts to influence public opinion.

Also, in an era where ‘no-questions-asked’ aid is available from, other sources like say China, why would a dictatorial leader even bother with the Bank or any bilateral aid for that matter?

Dear Duncan: Thanks for generating a discussion on our paper. Your comments are well-taken, with two exceptions: (1) I don’t think our conclusions are that different from Doing Development Differently and others. As you know, DDD also calls into question the “project” as the unit of development assistance. Our proposal of using knowledge to inform citizens is not based on humility (something I’m rarely accused of) or “politics” but rather on effectiveness and comparative advantage. Quite simply, change is not going to happen unless there is a domestic political consensus for the change. No amount of conditionality, technical assistance and money will bring about sustainable change if the citizens don’t demand that change from their leaders. Secondly, external actors have the possible advantage that they can credibly claim to be providing objective information. If the external actors are themselves part of the domestic politics (that is, associated with one side of the debate), then it is harder to claim that their information is objective. (2) The implication for the safeguards policy is not the one you draw (“watering down”) but rather that a country will implement safeguards if its citizens demand it, and our role should be to inform citizens about the consequences for violating safeguards (and the costs of maintaining them) so that they will hold their leaders appropriately accountable. Keep in mind that safeguards should apply to all government projects, not just those financed by donors (which is what the current safeguard policy covers). So we are trying to promote the sustained application of safeguards in developing countries. This is a far cry from replacing safeguards with “vague and easily fakeable conditions on transparency and [bunging] grants to governments, no questions asked.”

Thanks Shanta, on the safeguards point (which I confess is not an issue I follow much), it sounds like you are advocating a move from short route to long route upwards accountability – i.e. instead of governments answering directly to donors via safeguards, they should do so via their internal political processes. Great if that happens, but the obvious question is, what if it doesn’t? The defenders of safeguards see them as, well, a safeguard to ensure Bank lending ‘does no harm’ in such hostile political environments. I agree that that may be wishful thinking, but what are you proposing instead, other than ‘don’t start from here’?

In summary, I read Shanta and Stuti’s paper as making the case (or setting out the hypothesis to explore), that targeted transparency can support cycles of progressively richer political engagement, which can – ultimately through electoral accountability – generate more effective governance, and, in turn, better development outcomes. And that in order to put that theory of change into action, aid should be provided to governments conditional on open governance that supports political engagement,

Clear. Persuasive. And definitely worth exploring.

For starters I’d want to dig in to the relationship between open governance (including as supported/promoted by the Open Government Partnership) and political engagement, particularly that which involves electoral accountability. How many National Action Plans include commitments to holding open elections?

I’d also want to challenge the phrasing of what is a catchy title. As the paper itself makes clear, politics is not only the problem, but must also – given that it’s all about power – be part of the solution.

And I’d like to explore whether and how social accountability work – a route of accountability that bypasses elections – can be a useful part of the picture.

Finally, while Duncan suggests that “Thinking and Working Politically, Doing Development Differently etc.” draw the opposite conclusion to Stuti and Shanta’s paper, I’m not sure that’s right. Many of those conversations do revolve around the question of how external actors should do things differently. But the most interesting and useful ask that in order to explore how external actors can better support the efforts of country-level actors to navigate and shape the governance landscape and address development challenges.

Thanks to Makarand for his comment. It’s important to remember that in some quarters the World Bank’s engagement is not welcome and its credentials as a trusted provider of objective information are questioned. External actors who want to be part of the solution need to grapple with that too!

Haven’t read the paper, just Duncan’s post and the comments – and just amazed at how out of touch with power dynamics Shanta is… Does he really believe that “a country will implement safeguards if its citizens demand it, and our role should be to inform citizens about the consequences for violating safeguards (and the costs of maintaining them) so that they will hold their leaders appropriately accountable” ? Take for instance the Metro Colombo Urban Development Project implemented by Sri Lanka’s Urban Development Authority (UDA), partially funded by the World Bank, and partially by the GOSL, that took no account of any safeguards regarding the displacement and resettlement of urban dwellers, despite considerable public outcry and civil society activism, including a discussion with leading donors and led by the then UNDP resident representative. The Bank itself turned a blind eye, professing that in the sections of the project that they funded there were no violations, despite the fact that their project partner, the UDA, was going against all good practice (including Sri Lanka’s own National Involuntary Resettlement Policy). Informing citizens is a good thing – though the Bank seems as reluctant to get information out as does governments. But having information alone is not going to help when a government is as authoritarian as the Rajapakse government was, and even if Sri Lankans eventually did democratically change their government, it was too late for all those people who lost their homes.

Pryanthi Fernando makes an excellent argument. It appears that organizations such as the World Bank and CGD employ highly educated elites who are out of touch with the reality of the developing world. They should be required to spend three months a year living in urban shanties or rural hinterlands of a country other than their own as a condition of continuing employment with such organizations.

While managing a large non government organisation delivering service both in partnership with the government or exclusively for over a decade, I have yet to come across politicians whose first priority is to address the issue of improving services.This is the last pressure they are going to face although the schools and hospitals are delivering miserable services The most pressing problems for politicians is jobs( the private sector does not create them) so the public sector becomes a place where everyone seeking employment has to be accommodated. The pressure falls on the politicians. So the airline, the schools and hospitals have to be filled by people who seek jobs. The politicians know that it is not possible to give everyone a job. But what is possible is the politicians recommending people to organisations who politely receive them and with sugar coating inform them that they will have to wait for jobs. The politicians has played his role in trying to find his constituent a job or at least showing that he is concerned for them. The WB may come up with some wonderful ideas about long and short routes to accountability but sadly in the world out there little of that applies. Even in the difficult conditions there are institutions able to deliver services innovatively working within these constrains. But is the WB willing to learn from these or like the WDR in 2004 put us all on another wild goose chase

I’m surprised that Priyanthi thinks I’m out of touch because her comment illustrates and reinforces my point. Under the current safeguards policy, the World Bank had no jurisdiction over the parts of the project that didn’t use Bank funds. Now consider a different scenario (which is what I was proposing): the Bank uses its knowledge resources to rigorously evaluate the impact of the whole Metro Colombo project, and then disseminates this information (possibly working through CSOs) to the citizens of the affected areas. The outcome may not have been different, but having citizens armed with credible information from external (and presumably objective) sources should make governments–who are always concerned about the next election–think twice before going ahead with a policy. At the very least, it would strengthen the hands of the CSOs and others who are trying to defend the interests of these citizens.

Incidentally, this is also my reply to Duncan’s rejoinder, namely, that the current safeguards policy is not necessarily a “do no harm” principle because it only applies to that portion of public spending that is financed by the Bank. In most countries, Bank financed spending is a tiny fraction of the total. So we should not be lulled into a sense of complacency that, even if the Bank has a very good safeguards policy, that we are doing everything possible to help the citizens of the country develop.

Finally, on Masood’s comment, that he has “yet to come across politicians whose first priority is to address the issue of improving services”, this is precisely the problem we address in our paper. The reason why politicians focus on jobs rather than quality services is that the public sees the former as something the government can deliver, whereas the latter is more mysterious. This is the information asymmetry that leads to poor public services. I spent some time living and working with a poor woman in Gujarat (yes, we do spend time in these areas). Her kid was sick and she paid to take him to a private doctor (who I suspect was a quack). When I asked her why she didn’t use the free public clinic, she looked at me as some kind of fool and said, “The doctor is never there.” I then asked why the doctor wasn’t there. Her answer: “Because the rains didn’t come this year.” This brought home to me the information problem. She saw the absentee doctor as an unfortunate event, rather than a failure of public policy. If she understood that it was politicians who tolerated doctor and teacher absenteeism, then she might vote for politicians who could improve the quality of services, in which case the politicians would be concerned about improving services. This is the role that information in the hands of citizens can play.

I just added my tuppenyworth on this at the BBC Media Action research and insight blog – http://bbc.in/2b57AEC. I think these two reports are among the most refreshing I’ve seen for a while and huge kudos to Shanta and his colleagues for doing them. I understand some of the concerns but this kind of analysis is precisely what we need right now if we’re going to reenergise governance debates in the context of Goal 16 and development debates more broadly.